U.S. Trade Representative Proposes Sweeping Section 301 Tariffs to Combat Global Trade of Forced Labor Goods

By Brett W. Johnson, T. Troy Galan, and Thomas Williams

On June 2, 2026, the Office of the U.S. Trade Representative (USTR) announced the results of 60 simultaneous Section 301 investigations and proposed imposing additional ad valorem tariffs of 10% or 12.5% on virtually all imports from 59 countries and the European Union (EU), encompassing 99.4% of U.S. imports.¹ The USTR found that 44 countries failed to impose a prohibition on the importation of goods produced with forced labor, and the remaining 15 countries and the EU failed to effectively enforce this prohibition,² constituting an actionable practice under Section 301 of the Trade Act of 1974.³ Although likely to face a litigation challenge, companies across the global supply chain should consider the impact on current operations, any existing tariff mitigation strategy, and ensuring document retention policies to address proper submission to U.S. Customs and Border Protection (CBP) and any potential refund if the judiciary continues to strike down implemented tariffs.

Section 301(b) of the Trade Act authorizes responsive measures when foreign acts, policies, or practices are “unreasonable or discriminatory” and “burden or restrict” U.S. commerce.⁴ The USTR is authorized to “impose duties or other import restrictions on the goods” among other responses under its discretion.⁵ These proposed tariffs demonstrate a continued willingness by CBP to pursue broad-based tariff measures following the invalidation of tariffs under International Emergency Economic Powers Act (IEEPA) and the current litigation surrounding Section 122 tariffing authority.⁶

I. The Proposed Section 301 Tariff Structure and Exclusions

The USTR’s proposed tariffs create a two-tier framework for additional ad valorem rates of 10% and 12.5%, with some limited exclusions. The 10% ad valorem tariff rate would apply on imports from 15 countries and the EU that have either imposed a forced labor import prohibition with inadequate enforcement, have undertaken commitments through an Agreement on Reciprocal Trade, or have imposed a partial regime with the effect of preventing the importation of certain forced labor goods. This group includes the EU, as well as Canada, Ecuador, Indonesia, Mexico, Pakistan, Argentina, Bangladesh, Cambodia, El Salvador, Guatemala, Malaysia, Taiwan, and the United Kingdom. The remaining 44 countries, which the USTR found to have failed to impose a legal prohibition on the import of goods produced with forced labor, will face an additional ad valorem tariff rate of 12.5% on goods imported to the United States.

However, there are some notable exclusions from the USTR’s proposed tariffs. Exclusions are listed as:

1. Goods currently subject to Section 232 national-security tariffs;

2. U.S. – Mexico – Canada Agreement (USMCA) compliant goods;

3. Certain foodstuffs, fuels, minerals, aircraft parts, informational materials; and

4. Textiles and apparel under the Dominican Republic – Central America Free Trade Agreement.⁷

Of note, the USMCA is likely considered the strongest benefit of the exclusions. However, the USMCA is a complicated regime that requires strict interpretation of country of origin to obtain the benefit. As such, because so many companies utilize a global supply chain, it is likely that the items manufactured in Mexico and Canada contain parts from other countries. Under such scenarios, companies should understand the “substantial transformation” test when analyzing the correct country of origin and whether there is USMCA exception applicability.

In addition, many importers are reviewing the benefits of foreign trade zones (FTZ), which is different from other countries that support free trade zones. Under an FTZ, parts are imported into a FTZ, but technically are not “imported” to trigger the import tariffs. The tariff (in most cases) is only applied once the finished item leaves the FTZ and is “imported” into the United States. If the item is substantially transformed, it may avoid the tariff – however, CBP has made changes to this to capture tariffs on the value of some parts. In addition, manufacturers operating FTZ’s are sometimes eligible for other state tax breaks and economic incentives.

II. Historical Parallels to Blood Diamonds and Uyghur Forced Labor

The USTR’s proposed tariffs follow parallel approaches previously taken by the United States against blood diamonds and goods produced by forced labor in the Xinjiang Uyghur Autonomous Region. Under the Clean Diamond Trade Act, the United States prohibits the importation of rough diamonds unless accompanied by a Kimberley Process Certificate, conditioning a diamond-producing nation’s access to the U.S. market on compliance with international norms.⁸ Likewise, Section 307 of the Tariff Act of 1930,⁹ prohibits the importation of goods “mined, produced, or manufactured wholly or in part” by forced labor, providing the foundation for the Uyghur Forced Labor Prevention Act (UFLPA).¹⁰ The UFLPA creates a rebuttable presumption that all goods produced in the Xinjiang Uyghur Autonomous Region are made with forced labor, placing the burden on importers to demonstrate otherwise.

USTR enforcement data reveals that since 2022, CBP has denied entry to roughly 2,000 solar-sector shipments valued at $3.26 billion and 5,160 apparel shipments originating from economies such as Bangladesh, Cambodia, and Vietnam under UFLPA enforcement.¹¹ In its investigative report, the USTR details how forced labor goods — particularly polysilicon and cotton from the Xinjiang region — are shipped from China to intermediary countries for minor processing and manufacturing before importation to the United States in an attempt to circumvent U.S. laws.¹²

The proposed Section 301 tariffs aim to close this gap by incentivizing each country in the supply chain to adopt and enforce its own import prohibitions, just as the Kimberley Process Certification Scheme ensures that every link in the diamond supply chain bears responsibility for excluding blood diamonds. Otherwise, in the USTR’s view, a country that fails to prohibit illicit imports “permits market conditions where imported [illicit] goods have a competitive advantage over U.S. goods.”¹³

III. Practical Implications for Firms and Importers

The scope of the USTR’s proposed Section 301 tariffs is significant, affecting 99.4% of all imported goods and layering on top of existing tariff obligations. On a slightly smaller scale, the Section 301 tariffs continue the IEEPA tariffs struck down by the U.S. Supreme Court. Firms across the global supply chain and eventual end-user customers should: (1) evaluate their supply chain exposure to forced labor risks, particularly with respect to goods originating from the Xinjiang Uyghur Autonomous Region; (2) assess whether any of their imports fall within the proposed exemptions set forth in Annex A to the USTR’s Federal Register Notice; (3) monitor developments as CBP finalizes the tariff rates and any exclusion processes; and (4) track variances in pricing (either via line item tariff application on purchase orders or price increases) to understand the impact of the tariffs and be prepared for potential refund from either CBP or the importer of record who passed on the tariff as a cost.

Additionally, importers should also consider the strategic value of entering goods now under the Section 122 tariffs before the proposed Section 301 tariffs take effect, thereby preserving the ability to seek refunds on duties paid under Section 122 if the U.S. Court of Appeals for the Federal Circuit ultimately upholds the U.S. Court of International Trade’s decision in Oregon v. United States.

The bottom-line is that the volatility in tariff application is unlikely to change in the next few years. If the judiciary strikes down tariffs, CBP will either continue to appeal and apply such tariffs during any stay of proceedings or continue to find alternative means to apply the tariffs. Therefore, companies should consider developing tariff mitigation strategies based the USMCA, FTZs, or redundancy of sourcing in several countries, while avoiding schemes that are illegal and could impact business operations.